From the CME:
Nat Gas prices are struggling today as the futures contracts have been in negative territory for the entire session (so far) with the spot contract now solidly below the $4.40/mmbtu resistance level and close to testing the $4.30/mmbtu support level. The market is still digesting the all-time record withdrawal from inventory reported yesterday with what is already expected to be an underperformance in the withdrawal level in next week's report.Today's 5-minute interval cahart via FinViz:
Much like the market priced in a record inventory withdrawal prior to its release this week market participants seem to be pricing in a lower than normal withdrawal ahead of next week's report. This week's weather has moderated compared to the bitter cold experienced during the movement of the polar vortex south.
However, the latest NOAA six to ten day and eight to fourteen day forecasts are both projecting very cold temperatures over the eastern half of the country for the better part of the rest of the month. The cold temperatures will begin to roll in along the east coast sometime next week. The current weather forecast is projecting an above normal level of Nat Gas related heating demand which will result in an over performance in inventory withdrawals for the last several weeks of January.
If the projection for a return of the bitterly cold temperatures in February (as projected by the Weather Centre) does actually materialize the deficit gap between current inventories and last year and the five year average will widen significantly and serve to be very supportive for Nat Gas prices.
In this week's EIA Nat Gas report average dry natural gas production grew by 0.8 billion cubic feet per day (Bcf/d)(1%) in 2013 compared with 2012, the smallest growth since 2005. High crude oil prices have encouraged operators to target the more liquids-rich shale basins, including the Eagle Ford and portions of the Marcellus and, correspondingly, to decrease drilling in basins where a relatively greater share of production is dry natural gas.
Gas consumption declined significantly as temperatures warm. Total natural gas consumption for the report week declined by 30.6% below last week, to the lowest level in four weeks, as temperatures warmed following last week's cold snap. Residential/commercial sector and electric sector consumption decreased by 38.1% and 31.0%, respectively, as Lower 48 average daily temperatures reached 44 degrees Fahrenheit, compared to last week's average of 29 degrees Fahrenheit. Industrial sector consumption also declined by 8.7%, while exports to Mexico rose by 8.4%.
The largest percentage decreases in electric sector consumption of natural gas this report week came from the Midwest and the Midcontinent, down 59.9% and 50.7%, respectively. These two regions also registered the largest increases in electric sector consumption for the previous report week. Large decreases also took place in Texas (36.7%), the Southeast (32.2%), and the Pacific Northwest (24.2%), with significant decreases also occurring in the Northeast, Southwest, and Rockies....MORE
